A slowing economy, FPI pullouts, muted corporate earnings and a bruising trade war made for a gloomy August. But, Dalal Street's money managers for high net-worth individuals (HNIs) put up an impressive show, bucking the trend.
Portfolio Management Services (PMSes) gave 6 percent returns in August, reversing heavy losses in the previous three months, data collated by PMS AIF WORLD, a research-based wealth management firm, shows.
The figure almost looks stellar when seen against the performance of the benchmark indices. In August, the Nifty and the Sensex wiped out 0.9 percent and 0.4 percent of investor wealth. The carnage was seen in the broader markets too, as the Nifty Midcap and BSE Smallcap fell 1.7 percent and 1.3 percent, respectively, in the month.
PMSes, like mutual funds, are an effective tool for investment. However, unlike MFs, the portfolio size has to be Rs 25 lakh and above.
Data shows that the 10 best performing PMSes gave 6.3-2.6 percent returns in the month gone by. For the data, the research firm only considered PMSes with an asset under management (AUM) of at least Rs 100 crore.
Ambit Coffee CAN was the biggest earner with 6.3 per cent, followed by Marcellus Consistent Compounders (5.8 percent) and Motilal Oswal Business Opportunities (4.83 percent).
Other big earners include ASK Growth Strategy (3.9 percent), ASK India Select Portfolio (3.8 percent) and Sundaram Emerging Leaders Fund (3.7 percent).
According to analysts, robust returns generated by PMSes indicate that a trend reversal in the market is imminent.
Over the last 18 months, a few heavyweight largecap stocks showed resilience, otherwise, the entire equity market had seen a widespread correction, said Kamal Manocha, Chief Strategist, PMS AIF WORLD.
“Since PMS products are highly concentrated in stock allocations, they had to face most during this downtrend. However, last month shows initial signs of a trend reversal. And, this could be an important indication for high-risk long-term equity investors who are waiting and sitting on liquidity," he said.
August was a rough month for the Indian stock market. While benchmark indices remained largely rangebound, the broader market ruined the sentiment.
Foreign investors were net sellers for second straight month, withdrawing Rs 17,592 crore from the equity market. The exodus, triggered by the imposition of an additional surcharge on the super-rich, resulted in the withdrawal of more than Rs 30,000 crore between July and August.
Even the rollback of the surcharge failed to improve FPI sentiment and their selling spree continued.
Moreover, high-frequency data such as the GDP numbers signalled a slowdown. The poor health of banks and NBFCs, lower-than-expected quarterly earnings and the massive slump in auto sales added to the worries.
Disclaimers: The data analysed by PMS AIF World is up to August 31, 2019.
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